If you are not creating value, you are destroying it. A Facebook deal may happen any day now for $1 billion plus. YouTube got taken out last week by Google of $1.65 billion. MySpace was taken out last year by Murdoch for an estimated $560 million, but its recently estimated value is upwards of $15 billion.
What about the site that was one of the pioneers of Web 2.0, Friendster? As early as 2002 Friendster founder Abrams rejected a Google deal from $30 million that if it were paid in Google stock could be $1 billion today. Instead he decided to be the typical engineer who believes that his idea, his technology will win the day.
Today, Friendster, basically the first and only social networking site at one time, is ranked 14th among social networking sites and anxiously waits by the phone.
Here is why. Entrepreneurship is about creating value; however, to create value, especially in these times, requires relationships. Scientist, inventors and engineers are generally handicapped in this area. These highly ego-driven men of science (and yes, they typically are men), arrogantly believe that they are superior, their ideas are superiors and their technology is superior.
While this handicap manifests itself in a number of ways, there are two ways that limit their growth. First, they have difficulty selling. This is in large part because they don’t think they have to sell. They truly believe that their product or service will sell itself. Second, they have difficulty creating and maintaining relationships. This results in difficulty sharing managerial responsibilities and sharing ownership. What this means is that they can have trouble attracting quality management talent. It also means they may have difficulty attracting venture money because more than anything that requires and relies on relationships.
Ultimately, this can lead to the business being resource constrained which means that growth will suffer and in the extreme case, the business will starve and die.
Although Abrams was able to attract VC money, this may have been his downfall. Apparently the VC’s around Abrams fed his already bloated man of science ego by pumping him up with visions of becoming the next Google. With his eyes on Google and the VCs eyes on a huge payday, they tripped on the small things that were right at their feet.
Will Friendster get taken out? Probably, but at a fraction of what it could have been.